A Department for Work & Pensions spokeswoman said: "The department takes matters of fraud extremely seriously. DWP continues to provide full support to the ongoing investigation by Thames Valley Police, which is at an advanced stage.

"As today's charges are the result of a police investigation it would be inappropriate for the department to comment further during the criminal process."

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Nine people have been charged with a total of 60 fraud offences relating to allegations made against staff at the A4E recruitment agency contracted by the Government.

"It is alleged that they forged documentation to support fraudulent claims to the DWP for reward payments which, under the terms of the contract, were paid out when the scheme successfully placed individuals in employment," a Crown Prosecution Service statement said.

The claims date between February 2009 and February 2013 and those charged include one contract manager, seven recruiters and an administrator.

The Telegraph newspaper has obtained evidence of fraud submitted to Parliament by a former chief auditor at A4e. It says Eddie Hutchinson alleges that A4e and another employment firm Working Links oversaw a “disgraceful misuse of government and taxpayer funding”.

The company failed to act despite an “ever-increasing volume of frauds” Hutchinson said in his evidence.

The documentation supporting payments was seriously inadequate, and in a small number the claim was erroneous. The process established prior to March fell significantly short of our expectations. As a result, the Department has concluded that continuing with this contract presents too great a risk and we have terminated the MWA contract with A4e for the South East.

The Shadow Work and Pensions Secretary Liam Byrne has reacted to the news that the Government has terminated a contract with the welfare-to-work firm A4e after deciding that it would be "too great a risk" to let it continue:

After eight arrests at A4e the shambles in DWP contracts is now spreading.

We demanded that the Government came clean about these contracts months ago.

Now we hear they have been forced to cancel a contract vital to helping get people back to work just as Britain has hit a double dip recession made in Downing Street.

The Government must now stop hiding performance information about the rest of its giant private sector contracts and publish so that Parliament can see whether public money is being well spent.

These findings demonstrate what I have always maintained to be true – that there is no place for fraud at A4e and make it clear that A4e has strong controls around its flagship contract the Work Programme. Our immediate task is to further enhance our controls to cement our position as a trusted provider of front line public services.

The findings also vindicate the hard work our 3,500 staff do - day in, day out. All over the country we’re helping tens of thousands of people into training and work, knowing we have in place robust levels of quality and assurance. As a company, I recognise that we haven’t got it right all of the time, but we are committed to taking responsibility for our mistakes and remedying them.

No other provider has undergone such a thorough and forensic review of its contracts, and the positive outcome speaks for itself - this is huge reassurance for taxpayers and our customers.